Scientific Games Corp, a U.S.-based specialist in lottery equipment and management, on Friday said it had completed the US$5.1 billion acquisition of Bally Technologies Inc.
The previous day, the suitor company said it had passed the final regulatory hurdle to the move, with the Nevada Gaming Commission unanimously approving the deal.
“By pursuing continuous improvement in our business processes, we expect to enhance our margins, grow free cash flow to reduce our debt, and build long-term value for our stockholders,” said Gavin Isaacs, president and chief executive of Scientific Games in a statement on Friday. Mr Isaacs was previously chief executive of SHFL entertainment Inc, a firm that was itself acquired by Bally Technologies in a deal closed in November 2013. Before he was at SHFL, Mr Isaacs was chief operating officer of Bally Technologies.
This autumn, a number of investment analysts had expressed scepticism at the degree of leveraging involved in some of the current merger and acquisition deals in the casino supply sector, versus the earnings prospects of the consolidated companies and the amount of cost savings that could reasonably achieved.
On October 30, Mr Isaacs played down a Bloomberg News report earlier that week that banks led by JPMorgan Chase & Co had put off syndicating US$3.19 billion of loans for Scientific Games to finance the Bally Technologies acquisition.
He said at the time: “We have firm financing commitments in place to fully fund the transaction. We remain very comfortable with our planning, our ability to reach the anticipated synergies and our ability to repay the debt.”
The merger cost includes the refinancing of approximately US$1.8 billion of existing Bally Technologies’ net debt.
The closure of the Bally Technologies deal marks the end of a momentous period in Scientific Games’ corporate history. It began with the announcement in January 2013 that it was buying Chicago-based slot machine maker WMS Industries Inc for US$1.5 billion.
Friday’s announcement also included information on the senior management line-up of the newly consolidated Scientific Games, which reflects the influence of the merged companies as well as the parent and features three operating units: gaming, lottery and interactive. Mr Isaacs will remain as company president and chief executive.
Derik Mooberry, formerly senior vice president of games, table game products and interactive research and development at Bally Technologies, is to be group chief executive for gaming at Scientific Games.
Jordan Levin, previously chief operating officer of Williams Interactive, a subsidiary of WMS Industries, is to be president for interactive, in the new business.
James Kennedy, formerly president for printed products and chief marketing officer of Scientific Games, is to be group chief executive for lottery, under the new setup.
Scientific Games announced a loss of US$69.8 million in the third quarter of 2014, or US$0.82 per share, compared to a loss of US$69.4 million a year earlier, or US$0.81 per share.
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